Spot Time Bombs in Your Employee Handbook

Could your employee handbook be dangerous? Have you ever looked through it, pretending to be employee? Better yet, have you ever had your attorney read through your handbook to see how an employee might be able to use it in court?

This type of auditing can help spot potential time bombs… time bombs that employees could use against you.

Here are examples of what might be found — statements that might seem innocent but could turn into costly lawsuits.

  • In a company’s definition of a “full-time employee,” a handbook states: “After completing a three-month probationary period, you then become a full-time permanent employee.”
    • Why is this statement dangerous? You promised full-time employees permanent employment after they complete the first three months. Did you mean to promise an employment relationship that you could never terminate? A court could tell you permanent means permanent.
  • In a maternity leave policy, a handbook says: “Pregnant employees are to notify management as soon as possible once they find out they are pregnant. Upon entering the seventh month of pregnancy, employees are required to begin a medical leave of absence.”
    • Why is this policy dangerous? This is a loaded statement that pregnant employees could use to charge your company with discrimination. Under federal and most state laws, you must treat pregnant employees exactly as you treat other employees who are temporarily disabled. It must be voluntary for a pregnant employee to inform the company of her pregnancy and the need for a leave of absence.
  • An employee handbook has a statement on wages that reads: “Discussion of wages among employees is prohibited. Any employee who violates this policy will be terminated.”
    • Why is this statement dangerous? Because it violates the National Labor Relations Act, which gives employees the right to talk about working conditions, including wages. If the National Labor Relations Board finds you in violation of this law, your business can be heavily fined.
  • A policy in an employee handbook includes definitions of types of employees, with wording like this: “Regular employees are paid on an hourly basis. Salaried employees are paid on a salary basis and are not eligible for overtime pay.”
    • Why is this policy dangerous? Because paying an employee a salary doesn’t automatically make the employee exempt from qualifying for overtime pay. Federal and state rules govern which employees are exempt from overtime pay and determine whether or not an employee qualifies for exemption. Simply paying an employee a salary or by the hour isn’t the legal test.